Traders are preparing for the largest volatility in the history of the S&P on the day of the financial report! After the performance is announced, the stock market is expected to fluctuate by 4.7%.

Two days before the start of the US earnings reporting cycle at major banks, traders are nervously positioning themselves, preparing for what is expected to be one of the most volatile profit periods in stock market history. Strategists at Bank of America point out that options traders are anticipating an average increase and decrease of 4.7% in individual stocks in the S&P 500 index after earnings are announced, marking the largest swings on record. This high level of expected volatility reflects the current market uncertainty, particularly regarding inflation and the prospect of further interest rate cuts, which have left investors feeling uneasy. As a result, traders are turning their attention to earnings season in the hopes of finding some solace, at least for US corporations, where all is still well. Savita Subramanian, head of US equities and quantitative strategy, wrote in a report to clients on Monday, "We believe that this earnings season will once again be a stock picker's paradise." This viewpoint has been widely accepted in the market, as increased volatility is seen as good news for active managers who can distinguish between winners and losers regardless of actual results. It is noted that the US stock market has seen returns exceeding 20% for the past two years, marking the best two-year performance since the 1990s dot-com bubble. However, the start of 2025 has been rather lackluster. Since hitting a historic high of 6,090 points on December 6, the S&P 500 index has been struggling due to concerns that inflation could lead to long-term policy tightening and rising interest rates. JPMorgan Chase is set to release its earnings before the market opens on Wednesday, officially kicking off the upcoming earnings season. This is not only a crucial test for a stock market rebound after two years of strong gains, but also a focal point for the market. According to Bloomberg Industry Research data, analysts expect S&P 500 index component companies to report a 7.5% growth in earnings for the fourth quarter, the second highest pre-earnings forecast in the past three years, setting a high standard for corporate performance. Against the backdrop of high expectations, earnings briefly took a back seat in 2022 and 2023, but became a key catalyst for the US stock market last year. According to data from Bank of America, earnings accounted for 68% of the S&P 500 index's 12-month return. Last quarter, companies with sales and earnings per share exceeding the S&P 500 index outperformed the overall index, marking the largest increase since mid-2019. Subramanian further emphasized, "For short-term investors, differences in stocks will be exacerbated during earnings season, especially on the busiest reporting days." The busiest days of this quarter are expected to be from January 27 to 31, when the market will closely monitor the earnings performance of major companies to assess whether they can meet or exceed market expectations, thereby influencing stock price trends.